The IRS explains that in order to be deductible, a business expense must be ordinary and necessary for running a business or trade. Here are some general guidelines about what business taxes are as well as some of the things business owners may deduct from their taxes. First, let's start with explaining the oversimplified yet vague definition of "business expense":
Some examples of deductible business expenses are:
Vehicles and driving costs can also fall under the umbrella of business expenses, which is important if you're traveling to trade shows or similar events for client meetings. If you buy a vehicle for your business, it must be driven at least 50% of the time for business purposes. When it comes to writing off the cost of vehicles, the IRS is rather meticulous, so keep detailed records. Pick up a vehicle expense log or download an app.
Cell phones and internet expenses can also fall under business expenses if they're used primarily for business. Keep your business phone for business — never use it for personal calls. For safe practice, just keep two cell phones for separate purposes to avoid fringe benefits.
Company events are still deductible. If you host a company retreat with the goal of staff training rather than entertaining, you may be allowed to deduct it. Team building activities, such as sports games and scavenger hunts, are just two examples. Be sure to create company goals for your team and write down an agenda of events to share with both your staff and the IRS.
It's important to have a budget and watch cash flow to prevent your business from overspending. As with any tax-related subject, it's always better to play it safe and talk with your accountant before making any decisions.
If you’re looking to host any work-related event, let Spooky Nook Meetings & Events help! We offer corporate team building activities and can host private business meetings or large-scale events like trade shows. Schedule your event all in one place — we provide both accommodations and an on-site restaurant. Contact us for more information and schedule a tour!